The Malta Independent 18 August 2019, Sunday

Metro project currently feasible only in Sliema, St Julian’s; could require tax rise - PM

Albert Galea Wednesday, 27 March 2019, 11:21 Last update: about 6 months ago

With Malta’s current level of population, a metro project is only feasible for Sliema and St Julian’s and its implementation would require either more economic growth or an increase in taxation, Prime Minister Joseph Muscat said on Wednesday morning.

Speaking at the Chamber of Commerce, Muscat said that there were a number of questions that one had to answer before deciding to progress with any form of metro project.

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Quoting a thorough study that the government had commissioned two years ago, Muscat noted that in the first place, an underground metro could not be built all over the country; there would need to be a “mix and match” between over-ground and underground lines.  He added that this was a very long term project which would take at least 25 years and come at a significant cost in terms of the country’s GDP.

The cost of the project, Muscat said, must make everyone question the direction which the country is to take; “we cannot on one hand say that we do not want the population to increase, but on the other hand say that we want a metro system”, he said.

Muscat said that due to the cost of the project, no provider would be able to construct it and operate it at a profit, meaning that there is the need for a substantial subsidy.  This subsidy, Muscat said, had to either come from economic growth, or from increasing taxation.

The Prime Minister said that he was not trying to find excuses to not go ahead with the project, but noted that these matters are questions which must be answered before the project goes ahead. 

Muscat cited the decision to exclude a metro system being integrated into the Gozo tunnel as an example of the government’s decision to choose a direction; “we asked what the critical mass needed for a metro to Gozo, and we were told that for the metro to be feasible we needed to turn the island into another Sliema or St Julian’s.  Do we really want that?”

He noted that in this regard, the government had chosen to find other alternatives such as making public transport passing through the tunnel free of charge.

Metro system aside, Muscat noted that the top priority in the immediate is to have a “decent road network”, as Malta’s infrastructure is currently “not up to it”.  This road network would serve as the foundations for any decent structure of transportation, Muscat said.

Photos Alenka Falzon

Anyone successful in financial services industry attacked by EU Parliament tax haven resolution – PM

Reacting to a resolution by the European Parliament to label Malta and six other countries as having the characteristics of a tax haven, the Prime Minister said that this resolution does not single out Malta before adding that any country which has been successful in the financial services industry was attacked. 

The European Parliament on Tuesday overwhelmingly voted in favour of a report penned by the Tax3 committee, which labelled Malta and six other countries as having levels of foreign direct investment (FDI) which could only be explained to a limited extent by real economic activities within these countries.

Muscat said that the European Commission had already said that Malta is not a tax haven, and noted that what is important is the preservation of the country’s financial services industry.  He added that he does not forsee any shocks to this sector.

The Prime Minister admitted that there were certain instances that have led to reputational damage in Malta’s case, and noted that some were legitimately scrutinised at a European level while others had been extrapolated as a result of “internal Maltese bickering”.

He said that if one looks at the NFT report on the major money laundering scandals in Europe, it is not Malta which makes the headlines but it is other EU countries.  There is a legitimate drive by the EU to implement legislation with regards to money laundering, Muscat said, and this is something which the government agrees with. 

However, within the Maltese bubble, Muscat said, it is sometimes portrayed that Malta is the centre of focus for such things when it is not the case; he noted that the focus is on the industry as a whole.

Shift from planning guidelines to planning rules part of government’s direction – PM

A shift from having planning guidelines towards having set planning rules instead is the direction that the government should be taking in the next few years, the Prime Minister said.

Speaking about the current building scenario in Malta and, by extension, the role of the Planning Authority in it, Muscat said that there is a “lack of predictability” in how the Planning Authority works, noting that there have been times when he is walking in a street, notes a five-storey apartment block built in a street of two-storey houses, and wonders how such a property got a permit in the first place.

“There are some decisions [which the PA takes] which I cannot justify or endorse, and I have said as much publicly”, Muscat said. 

Muscat noted that he thinks that these sentiments indicated the need to do away with guidelines and instead implement set rules and regulations.  He said that it should be considered to change the regulatory structure in a sense wherein the PA would remain the supervisory regulator, but there would also be a strong element of self-regulation from the architects themselves.

These architects, Muscat said, would know that if they breach the set rules then it is their warrant which is on the line.

This is an idea which, Muscat said, had actually been proposed by a number of architects themselves, and he added that this was the direction that he thinks that the government should look to take in the planning sector in the next few years.

Pharmaceutical and tourism sectors are the two sectors which will be impacted most by Brexit – PM

The pharmaceutical sector and the tourism sector are the two sectors which will be impacted the most by Brexit, Muscat said.

The pharmaceutical sector, Muscat said, could be on the receiving end because the United Kingdom is Malta’s preferred source for medicine due to the common English language that the countries have.  Muscat said that the government is in discussion with medicinal importers so not to get caught out, adding that were required they are putting pressure on importers so to receive assurances.

However, he said that he did not forsee any shortages in medicine, but added that the government is ready to step in if it must.

The other sector which will see a certain element of impact is the tourism sector, not because of anything related to Malta’s competitiveness as a country but because of a decrease in consumer confidence that an “unexpected” Brexit would bring on the British market, which is where, statistically, most people travel to Malta from.  

Leisure tourism would be the first to suffer in the case of a decrease in consumer confidence in the UK, Muscat said, and any drop in the British Pound Sterling would also make all holidays to mainland Europe automatically more expensive due to the exchange rates between the Pound and the Euro. 

“I do not envisage any immediate real problems, but I think it could pan out in the 18 months after Brexit”, Muscat said.  He said that the Malta Tourism Authority is working well to intensify diversification efforts both in Europe and elsewhere, the latter, Muscat noted, becoming more important given increases in tourists from Japan and the United States of America.

Other than these two sectors, Muscat things that individual companies which have not thought out the added bureaucratic process of having to deal with new customs procedures and such would be most effected.  He said that Brexit would not necessarily impact their business model in a dramatic manner, but they would need to devote more time and effort into logistics – something which is an issue faced by the whole of the customs union and not just Malta

 


 

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